What are the cost of acquisition?
The cost of acquisition is a term used to describe the total amount of resources consumed in an effort to convert the management to the customer. This approach, sometimes identified as the cost of the event, takes into account various expenditures associated with efforts, including advertising through various media, time devoted to sales experts and any other related costs incurred up to the point of securing this customer. Calculation of this type of cost is important to businesses because it helps to determine which sources are used for the best advantage and which of them need to be discarded or adapted in some way to become more cost -effective.
The idea of acquisition costs can be seen as an investment identification provided by the Provider in securing the customer and finally closing the sales. A clear understanding of expenditure will be made within the effort, then it is possible to compare this amount with the planby the benefits associated with this customer. For example, if the total cost of acquisition associated with the landing of a client contract, which generates $ 1,000,000 per year in income in the next three years, included expenses that were $ 25,000, the cost of acquisition is definitely worth time and resources. If the same efforts result in ordering an order for goods or services that do not mean more than $ 30,000 on sale, the cost of acquisition is much less attractive.
Many factors go to determination of the cost of acquisition. Measurable expenditure, such as the cost of creating and operating on telemarketing to qualify potential customers, supporting materials ready to review, advertising in different media, time spent in persecution of a potential client and even expenses such as traveling to the client's involvement. The exact combination of fakTory will vary based on how the company is doing business and what types of efforts are used to attract consumer attention.
by identifying the current acquisition costs, companies can determine whether current sales and marketing strategies work or whether some changes are in order. For example, the company can find that television advertising attracts very little attention for its products, while online advertising generates a number of qualified potential customers that will eventually become customers. In this case, the enterprise may decide to minimize or even eliminate the use of television ads and focus more on online strategies to achieve and eventually obtain customers.